SEC Delays Muni Field Hearing

SAN ANTONIO — The Securities and Exchange Commission has postponed the municipal securities field hearing it planned to hold in Chicago on Nov. 16.

SEC spokesman John Nester said Wednesday that the field hearing, the second of six the commission plans to hold throughout the country, is being delayed because of scheduling conflicts, though he did not elaborate.

However, some market participants said they were told by SEC officials earlier this week that the hearing was delayed for budgetary reasons, presumably because the federal government is operating at restricted budget levels under a continuing resolution.

The field hearings, being led by SEC commissioner Elisse Walter, are expected to result in recommendations for regulatory and legislative changes as well as industry “best practices” documents, likely by the middle of 2011.

The SEC’s first muni hearing was held in San Francisco last month, where agency officials and market participants discussed a variety of topics, including the timeliness of continuing disclosures, pension funding issues, and the experience of retail investors in the market.

The SEC’s next hearing is now expected to occur at its Washington headquarters in December. The commission has yet to announce the topics and individuals expected to testify. Additional hearings are planned for Birmingham, Tallahassee, and Austin next year. It is unclear when the Chicago hearing will be rescheduled.

In planning its field hearing, the SEC has struggled to find adequate venues in each of the cities because it does not want to rent space from publicly traded ­companies or municipal borrowers, ­ruling out space from many hotels or nonprofit borrowers in the muni market such as ­universities.

The Chicago hearing was tentatively scheduled to be held at the SEC’s regional offices.

Some market participants are skeptical about the purpose of the hearings, claiming they appear to be designed mostly to bolster the SEC’s existing concerns about the market.

One market participant, who asked not to be identified, said recent comments by Walter seem to reflect the fact that SEC officials already have their minds made up about what needs to be changed in the municipal market.

He cited a Wall Street Journal story this week on conduit borrowers in which Walter said for-profit companies should not be able to evade corporate-style disclosure requirements by selling debt through tax-exempt issuers.